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risk management

2006-11-30 18:04:44.940404+01 by Dan Lyke 2 comments

John Robb called LA Times: Insurers learn to pinpoint risks -- and avoid them "The End of Risk Pooling".

I think the real problem is that as insurers learn how to better manage risk, there's incentive for the insurance company to mislead their customers on the nature of that risk. As risk pools become more focused, insurance companies make money because they assess risk better than not just their competitors, but their customers.

[ related topics: Current Events Earthquake Economics ]

comments in ascending chronological order (reverse):

#Comment Re: made: 2006-12-01 16:59:40.310217+01 by: petronius

Three points:

  1. There seems to be a perception that because I have a need for insurance that the insurance companies have a duty to provide it.
  2. The suggestion that insurers might slacken their pool-wide risk reduction efforts (ie, setting up Underwriter's Labs or giving discounts for smoke detectors) begs the question of why a private company should bear the weight of safety. 3)Regulations that forbid rate-setting via data-mining, even if so simple as zipcodes, simply make all insurance more expensive, for the risky and safe alike.

#Comment Re: made: 2006-12-01 17:11:54.566357+01 by: Dan Lyke

  1. Yep, I see that perception too. I generally break that argument down to the "so you and a couple of friends decide to..." discussion.
  2. Unfortunately it gets in the way of competitive advantage between insurers, but I'd like a way to get faster comparison information so that I can, for instance, get a better idea of total ownership cost of a car or house. Or a lifestyle choice.
  3. Yep. And quite often penalize those who take action to minimize their risks.

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